Ameris Bancorp 2024 First-Quarter 10-Q Summary
Business Context and Reporting Period
Ameris Bancorp is an Atlanta-based financial holding company operating primarily through Ameris Bank. The Bank operated 164 branches in Georgia, Alabama, Florida, North Carolina and South Carolina as of March 31, 2024. The filing reports unaudited results for the three months ended March 31, 2024, compared primarily with the three months ended March 31, 2023 and the December 31, 2023 balance sheet.
Key Financial Metrics
| Metric | Q1 2024 | Comparable / Prior Period |
|---|---|---|
| Net income | $74.3 million | $60.4 million in Q1 2023 |
| Diluted EPS | $1.08 | $0.87 in Q1 2023 |
| Adjusted net income | $75.6 million | $59.9 million in Q1 2023 |
| Adjusted diluted EPS | $1.10 | $0.86 in Q1 2023 |
| Return on average assets | 1.18% | 0.98% in Q1 2023 |
| Return on average equity | 8.63% | 7.54% in Q1 2023 |
| Net interest income | $201.4 million | $211.7 million in Q1 2023 |
| Tax-equivalent net interest margin | 3.51% | 3.76% in Q1 2023 |
| Noninterest income | $65.9 million | $56.1 million in Q1 2023 |
| Noninterest expense | $148.7 million | $139.4 million in Q1 2023 |
| Provision for credit losses | $21.1 million | $49.7 million in Q1 2023 |
| Total assets | $25.66 billion | $25.20 billion at December 31, 2023 |
| Loans held for investment | $20.60 billion | $20.27 billion at December 31, 2023 |
| Total deposits | $21.00 billion | $20.71 billion at December 31, 2023 |
| Shareholders’ equity | $3.48 billion | $3.43 billion at December 31, 2023 |
Revenue, Profitability, Cash Flow, Debt and Liquidity
- Total interest income increased to $329.5 million from $295.7 million, but interest expense increased to $128.1 million from $84.1 million. Higher funding costs reduced net interest income despite loan growth and higher asset yields.
- Noninterest income rose 17.5% to $65.9 million, led by mortgage banking activity of $39.4 million, up 25.6%. Mortgage production was $910.2 million, with a 2.49% gain-on-sale spread.
- Noninterest expense increased 6.7% to $148.7 million. The increase included a $2.9 million FDIC special assessment and higher data processing, loan servicing and tax and license costs.
- Loans increased 1.6% from year-end, driven by organic growth. Commercial real estate loans excluding owner-occupied properties represented approximately 40% of total loans, including $2.26 billion of construction and development loans.
- The allowance for credit losses on loans increased to $320.0 million, or 1.55% of loans, from $307.1 million, or 1.52%, at December 31, 2023. Net charge-offs were $12.6 million, or 0.25% of average loans on an annualized basis.
- Cash and cash equivalents were $1.21 billion at March 31, 2024. Operating activities provided $18.6 million of cash, investing activities used $370.0 million, and financing activities provided $395.4 million, resulting in a $43.9 million increase in cash during the quarter.
- Other borrowings totaled $631.4 million, up from $509.6 million at year-end. The Bank reported $4.15 billion of FHLB borrowing availability and $2.63 billion of Federal Reserve discount-window availability.
- The Bank was considered well capitalized. The consolidated CET1 ratio was 11.36%, the consolidated Tier 1 leverage ratio was 10.15%, and the Bank’s total capital ratio was 13.90% at March 31, 2024.
Material Changes Versus Prior Comparable Period
- Net income increased 23.0% and diluted EPS increased 24.1%, primarily because of lower credit-loss provisions and stronger noninterest income.
- Net interest income decreased 4.8% on a tax-equivalent basis, while the net interest margin declined 25 basis points to 3.51%. Average interest-bearing deposit costs increased to 3.31% from 1.82%.
- Provision for credit losses declined by $28.6 million, although the allowance increased because of loan growth and an updated economic forecast.
- Nonaccrual loans increased 9.0% to $164.7 million from $151.1 million at December 31, 2023. Total nonperforming assets increased to $182.7 million, or 0.71% of total assets, from $174.3 million, or 0.69%.
- Mortgage servicing income increased to $17.2 million from $14.2 million. Residential mortgage servicing rights were $172.0 million, supporting a portfolio of $12.64 billion of loans serviced for others.
- Available-for-sale securities had $50.1 million of unrealized losses attributed to factors other than credit, while the allowance for credit losses on those securities was $73,000.
- The Company repurchased 105,198 shares during the quarter for approximately $4.9 million, including shares surrendered to satisfy employee tax-withholding obligations. Approximately $94.7 million remained available under the repurchase authorization at March 31, 2024.
Guidance, Outlook, Commentary, Risks and Unusual Items
- The filing does not provide formal earnings, revenue, margin or balance-sheet guidance. Management stated that first-quarter results are not necessarily indicative of full-year results.
- Management used Moody’s baseline economic forecast in calculating the allowance for credit losses. The forecast reflected increased rental-vacancy assumptions compared with year-end.
- Key risks include higher-for-longer interest rates, deposit repricing and funding costs, real estate market conditions, commercial real estate concentration, borrower credit deterioration, collateral values, competition, regulatory changes and securities valuation volatility.
- The Company’s interest-rate simulation projected that a parallel 400-basis-point decline in rates could reduce baseline net interest income by 5.0% over 12 months and 16.9% over 24 months. A parallel 400-basis-point increase was projected to reduce 12-month net interest income by 4.6% but increase 24-month net interest income by 6.6%.
- Unusual or nonrecurring items included a $998,000 gain on bank-owned life insurance proceeds and a $2.9 million FDIC special assessment. Excluding these items, adjusted diluted EPS was $1.10.
- Management reported no material change to previously disclosed risk factors and stated that it did not expect current legal or regulatory matters to have a material adverse effect, while noting that outcomes could be material for a particular period.
Important Facts for Investors to Verify
- Whether deposit pricing and brokered-deposit usage continue to pressure the net interest margin.
- Trends in nonaccrual loans, commercial real estate performance, charge-offs and the adequacy of the $320.0 million loan-loss allowance.
- The sustainability of mortgage banking income, production volumes, gain-on-sale spreads and mortgage pipeline levels.
- Liquidity and funding trends, including uninsured deposits, deposit mix, borrowings and available secured borrowing capacity.
- The effect of unrealized securities losses, interest-rate movements and potential future changes in the economic forecast on capital and earnings.
- The filing’s unaudited status, non-GAAP adjusted results and the assumptions underlying forward-looking statements and fair-value estimates.